Larger Than Expected : M1 Jumps $5.9 Million, but Markets Are Unfazed

NEW YORK — The nation's basic money supply rose by $5.9 billion in late June, the Federal Reserve Board reported Thursday.

The Fed said the money measure, known as M1, rose to a seasonally adjusted $750.7 billion in the week ended June 22 from $744.8 billion the previous week. M1 includes cash in circulation, deposits in checking accounts and non-bank travelers checks.

Although the increase in M1 was larger than a number of economists had expected, the credit markets showed virtually no reaction to the report.

A poll of credit market analysts, conducted by Money Market Services Inc. of Redwood City, Calif., had a median projection for a $2.9-billion increase in M1.

The Fed attempts to provide the economy with enough money to sustain growth without rekindling high inflation.

The Fed announced earlier this year that, unlike previous years, it would not set a specific growth target range for M1 because of what it called uncertainty over the underlying relationship between M1 and the economy.

Instead, the Fed said it would more closely monitor broader monetary aggregates and other factors such as exchange rates, interest rates and economic growth.

In other reports:

- The Federal Reserve Bank of New York reported that commercial and industrial loans at major New York City banks fell $1.553 billion in the week ended June 24, compared to a gain of $133 million a week earlier.

- The Fed said discount window borrowings from the Federal Reserve System averaged $600 million daily in the week ended July 1, up from $534 million in the previous week.

- The Federal Reserve Bank of St. Louis reported that the monetary base, the seasonally adjusted total of member bank reserves held at Federal Reserve banks and cash in bank vaults and in circulation, was $262.9 billion in the two-week period ended Wednesday, down from $263.7 billion two weeks earlier.